Many venture capitalists are itching to make an investment in the “generative AI” field as ChatGPT gains popularity.
There was an age in the early 2010s when founders of new firms would sell their ventures with the phrase, “It’s like Uber, but for (fill in the blank),” and now it seems we may be approaching an era where founders will pitch their businesses by saying how they are like ChatGPT, but for everything.
Jasper, a content production startup that employs ChatGPT’s technology, was valued at $1.5 billion after raising $125 million in a Series A round in October. In October 2021, Copy.ai, a rival to Jasper that also leverages ChatGPT for advertising, earned $11 million in Series A funding.
Generative AI for healthcare has been gaining traction in the last year, with businesses like Syntegra, which creates artificial healthcare data, and Atropos Health, which focuses on doctors, receiving financing. Runway, an AI-powered video editing business, received $50 million in a Series C round in December, while Creative Fabrique, which uses AI to improve the design process, secured $61 million in January of 2023. The AI-based teaching feedback business TeachFX got $10 million in September, while the AI-enhanced textbook company Prof Jim secured $1 million in a venture round in January 2022.
Indeed, according to Grace Isford, a partner at Lux Capital, there is much more to come.
Isford said that “we’re only at the tip of the iceberg” when it comes to the various vertical uses cases for massive language models outside of the creative industries in areas like as biology, manufacturing, and healthcare. Eventually, “AI will be incorporated into everyday operations in a seamless manner.”
Recent generative AI models are great since they can be used by other businesses. ChatGPT and DALL-E are operated by OpenAI, which collaborates with companies including Jasper, Copy.ai, and the mental health business Koko.
A flood of new companies
Because generative AI models are becoming more accessible, startups can implement their “ChatGPT, but for plant lovers” notion much more quickly now. That’s wonderful news for a lot of investors. They anticipate that generative AI will soon be as commonplace as cloud computing and the internet.
But down the road, there’s a danger that entrepreneurs will be utilising ChatGPT for ChatGPT’s sake. Unfortunately, not all generative AI businesses are sustainable, and not all industries have challenges that can be addressed by this kind of AI.
SpotOn, a ride-hailing app for dogs and their owners, and Getir, a grocery delivery service, sprung up in the wake of Uber’s meteoric ascent, but few of these competitors were able to achieve the same level of popularity or revolutionary impact.
Josh Constine, a partner at Signal Fire, has noted that investors seem to be optimistic that their money invested in generative AI will provide positive returns.
Constine said, “As with other fashionable industries, there are firms that are or will be worth far more, and many more that will never live up to their hype.” Traditional companies are being revolutionised by the depth and efficacy of generative AI, in contrast to previous cycles when usefulness appeared theoretical or at least far away.
Since generative AI is still in its infancy, it’s likely that businesses will continue to find novel applications for it.
Sooner or later, the novelty of generative AI will wear off, and startups will face the same sales and profit challenges that any other business does. But for now, just being the centre of attention will do.
